Week Ahead Economic Preview

Next week's data flow from the US, eurozone and Japan will be scrutinised to gauge how the respective economies are performing in the second quarter. Key statistics include US durable goods orders, home sales and consumer confidence, as well as inflation numbers for the euro area and Japan; all of which will provide clues as to the underlying economic growth and price trends.

US industrial strength is under the spotlight after recent official data on manufacturing output missed expectations, with data on durable goods orders set to provide more signals as to the health of the manufacturing sector. June flash PMI data painted a picture of slowing industrial growth in the face of wavering demand for US goods.

With June flash PMI data rounding off the strongest quarter of economic expansion for over six years in the eurozone, attention now shifts to next week's inflation numbers from Eurostat. PMI surveys have indicated easing inflationary pressures across the region despite solid economic growth. If confirmed by official data, this will support the central bank's cautious stance towards withdrawing monetary stimulus.

Alongside the flash inflation data there are updates to consumer and business confidence surveys, which will provide signs as to how consumption and investment trends will progress in the coming months.

In Japan, analysts are keenly watching the data flow to assess the performance of the economy in the second quarter. A host of data on household spending, housing starts, retail sales, employment and inflation will therefore come into focus. Notably, there are concerns of some waning of the current manufacturing upturn after flash PMI surveys showed signs of slower growth at the end of the second quarter. That said, the survey suggested that Japanese firms expect the recent slowdown to be temporary.

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